Gold prices experienced a minor dip but retained their resilience above the $2,100 level on Wednesday, sustaining their proximity to a record high established in the previous session.
Spot gold observed a marginal decline of 0.04 percent, settling at $2,127.23 per ounce, while U.S. gold futures decreased by 0.25 percent to $2,136.65. The precious metal had achieved a record peak of $2,141.59 per ounce on Tuesday, marking the fifth consecutive session of gains.
In Dubai, gold prices exhibited an increase, with 24-carat gold priced at AED257.50 per gram, reflecting a rise of AED1.25. Simultaneously, 22-carat gold stood at AED233.25 per gram, witnessing an increase of AED1.
Sentiment-Driven Rally:
The recent surge in gold prices has primarily been fueled by sentiment, with growing expectations of U.S. interest rate cuts by mid-year gaining traction among traders. Last week’s disappointing U.S. economic data has heightened anticipations for a rate cut in June. Analysts, however, cautioned that sustaining the upward momentum of gold prices may depend on additional supporting factors such as dollar movements or geopolitical tensions to avoid potential profit-taking.
Focus on Powell’s Testimony:
Traders are closely monitoring Federal Reserve Chair Jerome Powell’s remarks on the economy’s health during his semi-annual congressional testimony. Powell’s insights on the likelihood of interest rate cuts, given concerns about the U.S. economic outlook in a high-interest rate environment, could provide clarity. There is a 71 percent chance perceived by traders for a June interest rate cut. Lower interest rates enhance the appeal of non-yielding bullion, thereby supporting gold prices. Ongoing uncertainty is further fueled by recent data indicating a slowdown in U.S. services industry growth and a decline in new orders for U.S.-manufactured goods. Additionally, this week’s U.S. labor market data will be closely monitored, and any downside surprise could contribute to supporting gold prices.
Central Bank Gold Purchases:
Experts underscored a significant increase in central bank gold purchases over the past two years, surpassing the historical average of 300 tons by buying more than 1,000 tons annually. This trend compensates for the decline in retail and ETF demand for gold.
Other Precious Metals:
In contrast to gold prices, spot platinum witnessed a 0.4 percent rise to $884.16 per ounce, while palladium recorded a gain of over 1 percent, reaching $958.20 per ounce. However, silver prices experienced a slight dip of 0.3 percent, settling at $23.63 per ounce, indicating mixed dynamics within the broader metals sector.
